The news comes after a month-long bidding war for Sandvine between PNI and Vector Capital, which offered $365 million for the company in May. Up to Friday's close, the company's stock had risen almost 40 percent since Vector Capital's initial offer in May. However, when PNI announced it was considering a rival bid for Sandvine in June, Sandvine's shares jumped to $3.16 per share - a two-year high.

Sandvine will be combined with Procera, and led by Procera CEO Lyndon Cantor, together with Procera CFO Richard Deggs. Procera, which is based in Fremont, California, sells internet intelligence addressing concerns such as deep packet inspection, policy charging and data analytics, enabling offerings such as parental controls, zero-rated content and real-time network monitoring.

The combined company will serve over 400 communications service providers, with over 1 billion subscribers in more than 100 countries, Andrew Kowal, a partner at Francisco Partners, said in a statement.

Sandvine retained Canaccord Genuity as its exclusive financial adviser, while Procera was advised on the transaction by J.P. Morgan Securities. Caputo will join the board of directors of the combined company as non-executive chairman. Get your FREE trial to Buyouts!